Quantum Graphite (ASX:QGL) concluded a binding ore supply agreement with the Sunlands Pure Group (SPG) for the consolidation of all downstream processing and refining activities within the group, according to a Friday Australian bourse filing.

Sunlands will be the exclusive offtaker of all mineral production from Quantum's Uley mines in South Australia, including Uley 2.

A cost-plus model will govern the offtake price and is subject to a minimum price that delivers Quantum a margin equivalent to around AU$375 per tonne of Sunlands' concentrate production.

This is subject to Quantum delivering a minimum monthly mineral production sufficient for Sunlands to generate annual refined production of 100,000 tonnes-per-annum, as well as achieving a maximum mineral production within seven years of first production to allow Sunlands to generate an annual refined production of 500,000 tonnes-per-annum over the balance of the term of the offtake.

The initial term of the offtake will be 20 years with an option for an additional 20 years. The agreement requires that Quantum maintain a minimum rolling ore reserve of three years' mineral production.